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In my previous articles in this series I’ve been answering
some of the commonly asked questions about investing in a franchise
opportunity. This is my final look at some of your key franchising
questions.

How can you spot a legitimate business opportunity
from a scam?

Unfortunately, many websites and classified ads promote what
amount to business scams alongside genuine business and franchise
opportunities. This makes it tricky for the investor to simply
identify a true opportunity, with an epidemic of scams looking to
take advantage of the aspirations of would-be
entrepreneurs.

It is not always easy to spot a scam, so to minimise the risk
of falling prey to these rogue traders it is essential to undertake
thorough research before embarking on any new business opportunity.
There is truth in the old saying ‘if it seems too good to be true,
it probably is’. Below are some of the most frequent, rarely
proven, claims which should be treated with caution:

•Huge profits, no competition, low level investment!

•Work no more than 20 hours per week and earn £50k + per
year!

•Run your own business, no experience needed, money back
guaranteed!

•Earn great profits, do it all from home with total
flexibility!

•No fees, absolute best products available anywhere!

•The ability to earn a substantial income working from
home!

These promised returns rarely materialise and investors can
get stuck holding worthless stock they are unable to sell. The fact
is that there are no shortcuts to wealth – the only people likely
to make money in these situations are the fraudsters.

Aspiring business owners need to apply lots of common sense
when researching potential business opportunities. A good place to
start your search is with fully proven franchise brands that are
based on years of experience and a tried and tested business
model.

How can I improve my credit rating?

Your credit history can affect your ability to borrow money
from a bank however a poor credit rating can have a far wider
impact on your ability to get a store credit, a mobile phone
contract or even pay insurance by monthly instalments.

It is worthwhile checking your credit report to ensure that
the information held on your file is accurate. Mistakes can happen
which may restrict your chances of obtaining credit so it is
important to regularly check the records and definitely do this
before making any major application. There isn’t just one credit
file and don’t assume that all your files will be identical. Your
credit files are held by Experian, Equifax and Callcredit. You have
a statutory right to check your files with all three credit
reference agencies.

Clearly it is best to avoid doing anything that could
adversely impact your credit history. Don’t worry if your credit
rating isn’t in the best shape because there are simple steps you
can take to improve your chances of securing the financial backing
you require.

First step is to stop applying for credit until you’ve sorted
out any problems. Every time you apply for credit it leaves a
footprint on your file. You should fix any mistakes on your credit
file by complaining to the relevant credit reference agency. They
have 28 days to investigate your concerns and either remove the
error from the file or explain why they may disagree with
you.

Get on the electoral register if you haven’t already done so
and cancel any unused credit cards. If you have defaulted on any
credit agreements in the past don’t bury your head in the sand,
speak to the lender and come to an arrangement to settle any
outstanding debt.

Moving forward ensure that you make all payments on time by
setting up direct debits as this shows that you are a responsible
borrower. Often these direct debits just cover the minimum payment
so if you want to clear your debt quicker you’ll need to make
additional payments but at least you’ll have the peace of mind of
knowing you won’t miss a payment.

Whilst having too much debt is to be avoided if you have never
borrowed before this can also work against you. If you have never
had a credit card or a loan, lenders cannot review your track
record to establish whether you are capable of sticking to a
repayment plan.

You may need to build your credit history before applying for
any major financial commitment. There are credit builder cards you
can apply for which are designed to help demonstrate your repayment
history and there is no interest to pay provided you repay the card
in full each month. Obviously if you have an unused credit card you
can start using that to rebuild your credit record rather than
applying for a new card.

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